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State of SMSF advice model needs ‘urgent wholesale review’

Two major accounting bodies have called for further discussion on the comprehensive review around defining the type of advice accountants can give regarding superannuation, as recommended in the final report of the Tax Practitioners Board review.

SMSF Miranda Brownlee 01 February 2021
— 2 minute read

Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia have lodged a joint response on the Review of the Tax Practitioners Board Final Report (the Report).

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The accounting bodies stated that further discussion was required urgently on the recommendation that the government initiate a specific review of the nature of the advice accountants can and cannot give in respect of superannuation and which accountants that might apply to.

“We note that the recommendation refers to accountants. However, as this is an undefined term, its use may cause uncertainty when considering advice and services that can be provided or any potential review,” CPA Australia and CA ANZ said.

“We are supportive of the government’s intention to review this recommendation as part of Recommendation 2.3 of the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. However, this review is not scheduled to commence until 2022 and has no defined time frame.”

The accounting bodies said they strongly recommend this review be brought forward to identify the important changes that are needed to establish a regulatory framework that encourages the provision of affordable, independent, quality advice by professionals and importantly seeks to engage, inform and protect the client in the process.

“The urgency of this wholesale review cannot be overstated,” CA ANZ and CPA Australia stated.

“Until such time that changes are made to the regulatory framework, other steps may need to be considered to support and preserve a viable financial advisory services market, including in the context of superannuation advice, so that it remains operative and able to provide these important advisory services in the period until a holistic review is completed and changes implemented.”

The accounting bodies also highlighted a need to address the regulatory complexity caused by years of layered regulatory reforms, without any appropriate review to ensure these reforms are meeting their policy intent.

“We agree that regulatory complexity and overlap should be reduced. This is integral to ensuring consumers and small businesses have access to affordable professional advisory services,” the accounting bodies stated.

“The new disciplinary system for financial advisers in response to Recommendation 2.10 of the royal commission has the potential to streamline current regulatory duplication. However, further discussion is required to ensure the design of the new system achieves the policy intent while still upholding robust consumer protections.”

In November last year, the government stated that it would support, in principle, a recommendation from the Review of the Tax Practitioners Board (TPB) to initiate a specific review of what advice accountants can and cannot give in respect of superannuation and which accountants that might apply to.

The final report of the TPB review noted that providing advice on establishing an SMSF is advice about a structure, and in the same vein as advice on establishing a company or trust.

Previously, BT head of financial literacy and advocacy Bryan Ashenden had also said that the discussion around the regulatory burden around certain types of strategic advice, including advice for SMSFs, is an important one, particularly if it helps more consumers to get advice.

State of SMSF advice model needs ‘urgent wholesale review’
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